The Colorado floods have devastated many communities across the front range and eastern counties. Our family spent the week in a surreal state, watching the events unfold live on television as we sat relatively high and mostly dry – it was difficult to comprehend that just 20 – 30 minutes away, lives were washing away.
At work, I office with several other real estate professionals and throughout the week, the conversation turned to the impact of an event like this on real estate. After all, the majority of the damage, was damage to real estate (this is not to belittle the loss of life and personal property – which is immense in its impact). Destroyed homes are the obvious example, but the issues go far deeper. Here is a quick A to Z list of a items that came to mind:
- Access – Many areas no longer have any functional road access – how does this affect property value in the short and long term?
- Apartment Rents – many who have lost or damaged homes will need temporary housing during reconstruction, much of which will come from apartment stock. Unfortunately, vacancies are already near historic lows and rents have been continually increasing.
- Contractors and Equipment – construction labor was already in short supply, equipment vendors (heavy equipment, dumpsters, portalets, generators) will be strained to keep up with demand.
- Eminent Domain – rebuilding may require State and Local officials to acquire new rights of way or easements for construction and access.
- Economy – the floods represent a significant disruption to the the local and, to a degree, regional economies. The disruption will lead to temporary losses, but the recovery period could result in a de-facto “stimulus”, as federal money and insurance money flow in to help rebuild.
- Flood Hazard Areas – the scope of water movement will likely create new flood ways and flood hazard areas.
- Home Inventory – early estimates indicate the number of homes lost at 1,500+ and over 17,000 homes damaged. That is a significant amount of housing stock which will need to be replaced – in an already-tight market.
- Insurance – rates in local areas will likely increase in response to the multiple events Colorado has suffered recently – this will affect commercial property owners as well as residential.
- Oil and Gas – the impact on oil and gas development across Northeaster Colorado remains to be seen.
- Pollution – What is the impact of the raw sewage, hydrocarbons and other chemicals which washed across fertile farm land – as well as the immense amount of storm debris which will need to hauled out?
- Structural Engineering – does the concept of a 100 year or 500 year flood – which has been shattered in many areas, change the structural requirements for roads, bridges and buildings?
- Time – winter is coming. The windows for large- scale construction projects in mountain areas is shutting quickly.
- Values – how does this type of event get recognized and incorporated into property values and what is the long term impact.
This is surely too short a list….